2018 Q2 Dealer profitability
15 August 2018
Dealer profitability, as measured by net profit as a percentage of sales (NP%S), for the second quarter of 2018 was 1.5%. This left the first half of the year at 1.5%, down by 0.7% on the same period in 2017. Despite an increase in gross profit from Fixed Operations, declining Vehicle revenues and falling F&I income meant the average dealer saw a net drop in their profit in the first half of the year.
New South Wales/Australian Capital Territory
The average NSW/ACT dealer NP%S was 1.2% for the period Apr - Jun 2018 which is -0.9% down from the same period in 2017. Falls in New Vehicle gross and F&I income, coupled with increases in Overheads contributed to this decline.
The average NP%S in Queensland was 2.3% for Q2 2018, down from 2.9% in Q2 2017. Despite finding savings in their expense base, Queensland dealers were impacted by declines in New Vehicle profitability, F&I and Bonus Income.
South Australia/Northern Territory
The state group of SA/NT returned NP%S of 1.9% for the second quarter of 2018, however this was down -0.7% from the same period in 2017. In addition to seeing declines in F&I and increased expenses, SA/NT dealers also saw a fall in gross profit as their Fixed Operations performance softened.
After seeing NP%S of 1.6% in Q1 2018, dealers in Victoria & Tasmania returned NP%S of 1.3% in Q2 2018 - this was -0.3% down on Q2 last year. These dealers saw a more modest fall in F&I income than dealers in other states, but they were still impacted by declines in new and used vehicle profitability.
Dealers in Western Australia experienced the largest fall in NP%S in Q2 2018 - moving from 2.5% in 2017 to 0.8% in 2018. Despite finding savings in their cost base, WA dealers were unable to offset declining revenues and gross profit from their vehicle and F&I operations.
The dealers in the Volume segment had the highest profitability for Q2 2018 (1.6%), however this was down -1.1% on Q1 2017. The average Prestige segment dealer saw NP%S fall from 2.5% in Q2 2017 to 1.5% in Q1 2018. The dealers in the Luxury segment continue to find the market difficult, with NP%S of 1.4% in Q2 2018 compared to 1.8% in Q2 2017.
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